The comparative balance sheets of Larkspur Inc. at the beginning and the end of the year 2020 are as follows.

Net income of $48,260 was reported, and dividends of $29,340 were paid in 2020. New equipment was purchased and none was sold.

Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

During 2020, Cheyenne Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Cheyenne for a lump sum of $83,790 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Cheyenne sells 280 lounge chairs, 140 armchairs, and 168 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

Chapelle Appliances sells dishwashers for $ 1,200 each, which includes a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, Chapelle sold 600 dishwashers on account. Based on experience, the company has estimated the total 2-year warranty costs at $ 40 for parts and $ 75 for labour. (Assume sales all occur at December 31, 2020.)

In 2021, Chapelle Company incurred actual warranty costs relative to 2020 dishwasher sales of $ 4,000 for parts and $ 7,500 for labour.

Required:

1. Using the expense warranty approach (assurance-type warranty), prepare the entries to reflect all the above transactions for 2020 and 2021.

2. Assume that the company uses the ‘service-type warranty approach, and estimates that the value of the 2-year warranty for the dishwasher is $150. Record all entries for 2020 and 2021. Assume any warranty expenditures are expected to be incurred evenly over the two-year warranty period.

On January 1, 2020, the Ivanhoe Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,800; second quarter 6,600; third quarter 7,600. Ending raw materials inventory: 40% of the next quarter’s production requirements. Ending finished goods inventory: 25% of the next quarter’s expected sales units. Third-quarter production: 7,780 units. The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.

Prepare a production budget by quarters for the 6-month period ended June 30, 2020.

Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020.

You Beaut Ltd is an Australian company which has a functional currency that is A$. It has reporting periods ending on 31 December and 30 June. On 22 November 2020 You Beaut Ltd sold some inventories to a Chinese customer for the agreed price of 400,000 Yuan. The original purchase cost of the inventories was A$75,000. On 19 January 2021, the customer pays the amount owing on the sales invoice to You Beaut Ltd.

The applicable exchange rates were:

                                    1 July 2020                  1 Yuan = A$0.24

                                    22 November 2020     1 Yuan = A$0.28

                                    31 December 2020     1 Yuan             = A$0.21         

                                    19 January 2021          1 Yuan = A$0.24

                                    30 June 2021               1 Yuan = A$0.22

Required:

In accordance with AASB 121/IAS 21, prepare the necessary journal entries for You Beaut Ltd to account for the above transactions for the half year to 31 December 2020 and the full year to 30 June 2021

You Beaut Ltd is an Australian company which has a functional currency that is A$. It has reporting periods ending on 31 December and 30 June. On 22 November 2020 You Beaut Ltd sold some inventories to a Chinese customer for the agreed price of 400,000 Yuan. The original purchase cost of the inventories was A$75,000. On 19 January 2021, the customer pays the amount owing on the sales invoice to You Beaut Ltd.

The applicable exchange rates were:

                                    1 July 2020                  1 Yuan = A$0.24

                                    22 November 2020     1 Yuan = A$0.28

                                    31 December 2020     1 Yuan             = A$0.21         

                                    19 January 2021          1 Yuan = A$0.24

                                    30 June 2021               1 Yuan = A$0.22

Required:

In accordance with AASB 121/IAS 21, prepare the necessary journal entries for You Beaut Ltd to account for the above transactions for the half year to 31 December 2020 and the full year to 30 June 2021

Selected ledger account balances for Business Solutions follow.

Required:
1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).
2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?
3. Compute the three-month total asset turnover for Business Solutions as of March 31, 2020.

Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock

Jones Corporation's capital structure follows.

During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 44,000 shares of common stock. The 8% bonds are convertible into 66,000 shares of common stock. Net income for 2020 is $1,955,000. Assume that the income tax rate is 25%.

Required

a. Compute basic EPS for 2020.

b. Compute diluted EPS for 2020.

• Note: Round earnings per share amounts to two decimal places.

During 2020, Pharoah Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pharoah for a lump sum of $47,880 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

During 2020, Pharoah sells 160 lounge chairs, 80 armchairs, and 96 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)